AS the longest running criminal trial in US history enters its third year, the issue it confronts - sexual abuse of children - still confounds the legal community and the general public. The McMartin preschool case, unraveling in a walnut-paneled courtroom here, has received nationwide - indeed, worldwide - attention. So far it has consumed 308 court days, 50,000 pages of transcript, and brought to the bench 99 witnesses. The cost to the public has been a record $15 million.

McMartin is a textbook case for lawyers and judges. It raises the question of whether the judicial process is equipped to handle with fairness the delicate and highly emotional issue of sexual abuse of minors. At several junctures the case has taken bizarre turns, some of which have threatened the continuation of the prosecution.

It also raises important issues of how to determine the validity of professionals' findings of molestation, how to evaluate children's testimony and protect the very young from intimidation in the courtroom, while guaranteeing the rights of defendants.

The trial grinds on amid a marked change in the atmosphere regarding sexual abuse of children. In 1983, when the case first arose, the problem of child sexual abuse was not high in the public consciousness.

Then, with the allegations in McMartin, coupled with several other highly visible cases - most notably bizarre reports of widespread molestation in Jordan, Minn. - a ``crisis'' mentality erupted over the problem. Suddenly, authorities everywhere were flooded with reports of child sexual abuse.

This led to a backlash by some people, who argued many sexual-abuse charges were false. They were buttressed in their arguments by the collapse of the Minnesota case after it was revealed investigators had subjected the children to improper and suggestive questioning and the charges against five of the seven McMartin defendants were dropped because of lack of evidence.

Today, experts contend much of the hysteria surrounding the problem has subsided. While they note that sexual abuse is still a significant problem, the public does not see a child molester lurking behind every door.

``Sexual abuse, as horrible as it is, does not stand out as the only form of maltreatment being perpetrated against children,'' says Anne Cohn of the National Committee for the Prevention of Child Abuse.

Statistics bear these perceptions out. Roughly 16 percent of all child maltreatment reports made to state and local officials last year involved allegations of sexual abuse, according to the committee, up from 12 percent in 1983. The rest were complaints of physical and emotional abuse and neglect.

Still, the number of molestation reports continues to climb sharply: from 177,000 complaints five years ago to 350,000 last year. Experts disagree, however, whether the numbers mean the problem is getting any worse.

Most child-welfare advocates attribute the rise in reported cases to greater public awareness of the problem. A few, like Douglas Besharov of the American Enterprise Institute, a Washington, D.C., think tank, believe the actual incidence of sexual abuse is growing. He cites breakdown of families and a growing presence in the home of stepfathers and live-in lovers - frequently cited as abusers - as one reason why.

Others, however, think the depth of the problem is overstated for almost the same reason. Allen McMahon, a legal adviser to Victims of Child Abuse Laws Inc., a national group formed by parents who say they were falsely accused of sexual and other abuse, argues too many molestation charges are still unfounded. One reason for this, he contends, is the growing number of false accusations arising out of child-custody battles.

``Unfortunately, a lot of people take the attitude that if you are accused of child abuse, it must have happened,'' he says.

On one point, however, there is more unanimity: The incidence of sexual abuse at day-care centers and preschools is relatively rare, unlike many headlines in the early 1980s suggested. Recent work done by David Finkelhor at the University of New Hampshire suggests less than 1 percent of all sexual abuse incidents occur at day-care centers.

Whether McMartin turns out to be one of them will take more time to tell. Even though the trial is two years old - and follows an 18-month preliminary hearing - it will still be months before the jury gets to render its verdict on Raymond Buckey and his mother, Peggy McMartin Buckey.

The Buckeys, now free on bail after spending several years in jail, are charged with 65 counts of child molesting and conspiracy involving 11 children who attended their family-run nursery school. Conviction would mean life in prison.

The Byzantine case has taken numerous twists since it began in 1983, when a Manhattan Beach mother complained that her 2-year-old son was molested at his preschool.

Five women, plus the two Buckeys, were originally indicted by a grand jury in 1984 on 135 counts of molestation, sodomy, rape, and other allegations. Charges against five of the defendants were later dropped, because the district attorney said the evidence was ``incredibly weak.''

Last year 35 counts against the remaining two defendants were dropped by the prosecution.

At present, the defense is six months into presenting its case. It follows 14 months of testimony from prosecution witnesses, including nine children who said they were molested and medical experts who said they could tell the molestation had occurred.

The defense has put former McMartin teachers on the stand who have testified nothing improper happened. A number of witnesses remain to be heard from, including, probably, the defendants themselves.

The case could go on into 1990. Because of the length, Los Angeles Superior Court Judge William Pounders worries that a shrinking jury could lead to a mistrial.

Four of the original 16 jurors and alternates have been let go so far, leaving only two to spare. The judge recently decided to limit the rest of the case to only the most ``critical'' testimony and eliminated eight defense witnesses.

``The jury has about reached its limits,'' the judge said in a recent interview. ``I want them to be free of this case by 1990.''

Others would have liked to have been free of it a long time ago. The case, whatever the outcome, has disrupted the lives of the alleged victims and perpetrators, as well as their families and friends, the lawyers and witnesses. The court, too, has been affected, from the jurors who have been given special seats for their comfort, to the judge who says it has had the effect of holding him ``captive.''

``The case has poisoned everyone who has come in contact with it,'' says Judge Pounders, who has expanded his jogging regimen, taken up weightlifting, and is refurbishing his house to help keep his mind off the case.

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